student bank accounts - what you need to know

There’s a sense of dread and anticipation in the air. Tears of joy are shed, as well as some of plain old sadness too. Newspapers and television cameras are out in their droves to observe a disproportionately large amount of attractive young female students opening envelopes. Parents congratulate, and in some cases, console.

It can only mean one thing – it’s A level results season, and thousands of candidates will be finding out whether or not they’ve made it to their first choice university or not.

If you’re one of the people who have got in, or have to go through the lottery of clearing, then now might just be a good time to start pondering your student bank account options. You’ll need something to keep your loan/savings/generous parental donations in over the next few years, after all.

If you’ve done a bit of cursory investigation, you’ll notice that there’s quite a bit of choice on the market. And there’s good reason that banks bombard students with tantalising offers for bank accounts when they start university – they know very well that you’re unlikely to switch again, and may well end up being a customer for life.

So, here’s a few things to consider before you bustle off to the High Street with your UCAS confirmation and proof of address to set up your account.

WHAT’S THE INTEREST-FREE OVERDRAFT LIMIT?

Gone are the days of banks just offering measly record shop tokens as student account freebies. Nowadays, they’ll throw in everything from a free Young Persons Railcard to gadget insurance, to hard cash incentives.

But if you ask us, the real priority should be how much interest free overdraft you get. It’s only the most miserly or well-heeled students who won’t require one, after all.

Some banks offer a quite sensible ‘tiered’ overdraft system, which allows you to extend it year-by-year. Others, like Santander offer a relatively generous £1,500 interest-free limit from the offset, but that’ll be your lot for the duration of three years.

The Co-operative currently offers the most capacious guaranteed interest-free overdraft facilities of any bank (£1,400 in the first year, £1,700 in the second and £2,000 in the third). Meanwhile, Halifax’s students accounts could allow you to have an interest free overdraft of a whopping £3,000 in your third year, even though there’s no guarantee you’ll get it.

PRO TIP: For heaven’s sake, don’t exceed your agreed overdraft limit. “A limit is just that – a limit, not a target. If you go over your limit, you could be hit by high interest rates and hefty penalty charges,” says Ed Bowsher, banking expert at Lovemoney.com

WHAT FREEBIES ARE ON OFFER?

While having the most generous interest free overdraft should be at the top of most students’ priorities, it’s worth having a cursory look at what incentives are being offered as they might just come in handy.

If, for whatever reason, you’re planning on doing a lot of intercity travel, then that four-year Young Persons Railcard worth over £100 (such as that offered by Nat West) may be worth a look, even if it’s now only being offered to current account users who upgrade to a student account. (Boo!)

That said, you could quite conceivably cover the cost of one years’ worth of discount rail card action with Santander’s £50 cashback offer and still have over a tenner left to spare. £50 isn’t going to change your life, and is by no means a solid reason to choose one account over another, but it’s nice to have all the same. Just don’t spend it all at once, y’hear?

GET ONLINE BANKING

This can make financial life a whole lot easier, and cut out a lot of time-consuming ‘IRL’ banking for pretty much everything aside from putting cheques in – and who does that these days, anyway?

With a card reader you can set up direct debits, make payments and generally avoid the almighty faff of going to the bank. It can also mean you can keep a close eye on your finances, thus avoiding any painfully embarrassing incidents of having your request declined at the cash machine.

Some banks are even ‘apps’ for doing this sort of thing on your mobile, if you feel comfortable doing so.

NO SUBSTIUTE FOR GOOD BUDGETING

Whatever current account you chose, there’s no substitute for managing your money well. Keep a close eye on your finances, shop sensibly, and for heaven’s sake, don’t spuff your entire loan up the wall during fresher’s week.

There’s no need to live a hermetic, fun-deprived existence, but keeping tabs on your money will make those final few weeks of term when coursework’s due or exams are to be rather less stressful.